FHWA Operations Benefit/Cost 

Analysis Desk Reference 

Conducting Benefit/Cost Analysis of 

Strategies Impacting Non-Typical Traffic Conditions

Project Purpose

This brochure provides an overview of analytical methods that may be applied to assess the impacts and benefits of various operations strategies 

that are targeted at mitigating the negative effects of traffic congestion caused by non-typical conditions such as incidents, high demand (special 

events), inclement weather, and other causes. 

Analyzing operations projects within a conventional benefit/cost analysis framework designed to assess more traditional capacity expansion projects 

can be challenging since many traditional benefit/cost analyses focus on measurement of project benefits based on “typical” (average demand, 

good weather, no incident) days. 

Many operations strategies, meanwhile, are specifically targeted at non-typical conditions that occur as a result of non-recurring traffic incidents, 

inclement weather conditions, or periods of high demand. Since a disproportionate amount of the expected benefits of these strategies are incurred 

during non-typical conditions, the use of conventional analysis methods focused solely on typical recurring conditions will often result in the severe 

underestimation of potential benefits. 

Therefore, a different approach to conducting analysis and benefit/cost estimation for operations strategies is often required to fully assess and 

capture the expected benefits. In response to the needs of system operators to conduct these specialized analyses, several initiatives have been 

undertaken in recent years at the national, state, and regional levels to develop enhanced analysis methodologies capable of assessing the benefits 

of operations strategies specifically targeted at improving travel during non-typical conditions. 

Research Into Analyzing the Benefits and Costs of

Operational Strategies Impacting Non-Typical

Traffic Conditions

The FHWA Office of Operations recently completed the Benefit/Cost Analysis for Operations Planning Desk Reference, in recognition that practitioners were in need of relevant and practical guidance in how to effectively conduct benefit/cost analysis of a wide spectrum of transportation system 

management and operations strategies. This guidance includes a synopsis of analysis strategies intended to better measure and quantify the benefits 

of operations strategies impacting non-typical traffic conditions caused by incidents, inclement weather, construction work zones, and special events. 

Guidance was drawn from many recent and ongoing innovative analysis research projects, including:

• The Integrated Corridor Management (ICM) Analysis, Modeling and Simulation (AMS) Guidebook, 

developed by the FHWA Office of Operations.

• Guidebook on Analysis of Active Transportation and Demand Management (ATDM) Using Highway 

Capacity Manual (HCM) Methods, being developed by FHWA Office of Operations. 

• Strategic Highway Research Program (SHRP 2) Project L05 – Incorporating Reliability in the 

Transportation Planning Process.

• SHRP 2 Project L08: Incorporating Reliability in the HCM.

November 2012

Methods for Conducting Multi-Scenario 

Benefit/Cost Analysis Sensitive to NonTypical Conditions

Benefit/cost analysis is typically used to assess the relative efficiency of an 

existing or proposed project; therefore, the analysis must include analysis of conditions “without” the project (no-build baseline assessment) and 

“with” the project. The incremental difference between these two assessments represents the benefits of the project. 

Most analysis of non-typical conditions also involves the identification of 

specific operating conditions that deviate from the typical day, and the 

development of one or more specific analysis scenarios that represent 

operating conditions under these unique conditions. This approach is 

often referred to as multi-scenario analysis.

In adopting a multi-scenario approach within a benefit/cost analysis, the 

“with” and “without” assessment may need to be performed multiple times 

under various assumed operating conditions. In conducting this complex 

analysis it is important to: 

• Understand the full range (and distribution) of operating conditions 

which the analyzed project will be operating under;

• Develop various analysis scenarios that represent alternative operating conditions;

• Assess the likely impact of the project under the different operating 

scenarios; and 

• Annualize the benefit of the project based on the expected distribution 

(frequency) of operating scenarios.

Source: iStockphoto®.
The first step in the multi-scenario analysis approach is to assess the distribution of operating conditions and the impact these conditions have 

on traffic performance measures. The assessment of the distribution of 

operating conditions is ideally conducted using robust archived data 

sources providing a solid localized accounting of the typical frequency 

of occurrence of non-typical conditions, including (but not limited to):

• Incident occurrence (and severity);

• Inclement weather; and 

• Demand (high or low).

Other factors such as the presence of construction work zones or 

other factors also may be assessed depending on the study area and 

proposed project (strategies) being analyzed. The following table represents an average distribution of conditions (and combinations of 

conditions) developed as part of the FHWA Guidebook on Analysis 

of Active Transportation and Demand Management Using Highway 

Capacity Methods. The table compares the frequency of varying levels 

of demand (presented as percentiles of the demand curve) mapped 

against varying weather and incident conditions. The second column 

in the table shows the expected capacity loss related to the specific 

weather and incident conditions. The entries in the remaining cells are 

the percent of days over an entire year that the given condition exists 

for the time period being analyzed. They can be thought of as the probability of a scenario occurring. For example, the value of 6.31 percent 

in the first row indicates that over the course of a year 6.31 percent of 

the days have no incidents, good weather, and a demand at the 5th

percentile level (low demand).

Once the assessment of the distribution of operating conditions is identified, the analyst will need to identify those non-typical conditions they 

want to develop as specific scenarios in the multi-scenario approach. 

Practitioners may opt to focus their efforts on those operating scenarios occurring most frequently or having the most significant negative 

impact on congestion. Likewise, the analyst will want to map the analysis scenarios to the particular strategies included in the project they 

want to analyze. 

The baseline “without project” scenarios are then developed by altering 

network capacities, speeds, or other input parameters to represent the 

change in performance anticipated due to the non-typical conditions 

being analyzed. Once the identified baseline, “without project” scenarios have been analyzed, the next step is to add in the anticipated 

impacts from the analysis project and rerun each scenario to generate 

performance estimates for the “with project” scenarios. The probabilities from the scenario table are then used to weight the results for the 

“with project” and “without project” cases so that a composite picture of performance emerges. SHRP 2 Project L08 is building a more 

complex version of the basic model for inclusion in Highway Capacity 

Manual analyses.

A decision support tool, named the Tool for Operations Benefit/Cost 

(TOPS-BC), was developed in parallel with Benefit/Cost Analysis for 

Operations Planning Desk Reference. The TOPS-BC tool has a data 

repository of the observed impacts of a number of different operations 

strategies and the look-up function imbedded in the spreadsheet tool 

allows the research of potential impact ranges associated with various 

strategies and impacts. 

The TOPS-BC tool also may be used to assess the benefits associated 

with strategies on the various operating conditions. The spreadsheet 

format of the tool makes it easy to adjust input capacities and speeds to 

represent the various baseline conditions, and provides quick analysis 

allowing multiple scenarios to be run in little time. 

The incremental change between the “with project” and “without project”

analyses represents the benefit of the project during the conditions 

being analyzed. 

The final step in the multi-scenario benefit/cost analysis approach is 

to monetize and annualize the assessed change in performance. The 

approach used to annualize the benefits under multi-scenario analysis involves estimating the incremental benefit associated with each of 

the identified operating condition scenarios, and then multiplying that 

benefit with a factor representing expected frequency of occurrence. 

In a simplified example, an incident management system could be 

analyzed by estimating the incremental benefits the project would have 

on two different scenarios – a minor incident and a major incident. 

The incident management system would not be expected to have any 

impact on days without incidents. The analysis of the two scenarios 

reveals that the project has an average benefit of $20,000 on days with 

minor incidents and $80,000 on days with major incidents. Likewise, 

the analysis of the distribution of operating conditions reveals that 

minor incidents typically occur during 20 percent (73 days) of the year 

and major incidents occur during 5 percent (~18 days) of the year. To 

annualize the total benefit of the project, the estimated benefit for each 

scenario would be multiplied with the expected number of days that 

operating condition would be expected to occur, or:

(73 minor incident days * $20,000) + (18 major incident days * 

$80,000) = $2.9M TOTAL BENEFIT

The resulting benefit/cost analysis using a multi-scenario approach 

often provides a more thorough accounting of the potential benefits of 

many operations strategies over a more realistic representation of the 

environment and conditions in which they are anticipated to operate.

Project Contacts

If you have any questions regarding the Benefit/Cost Analysis for Operations Planning Desk Reference http://www.ops.fhwa.dot.gov/publications/

fhwahop12028/index.htm or the supporting Tool for Operations Benefit/Cost (TOPS-BC), please contact one of the individuals below:

Capacity Scenarios

Capacity 

Reduction

Demand Scenarios Distribution

Row

Total

5th

Percentile

20th

Percentile

50th

Percentile

80th

Percentile

95th

Percentile

No Incidents, 

Good Weather

Single Lane Closure,

Good Weather

Dual+Lane Closure,

Good Weather

No Incidents,

Bad Weather

Single Lane Cruise,

Bad Weather

Dual+Lane Closure,

Bad Weather

0%

35%

60%

4.9%

38.2%

62%

6.31%

0.13%

0.17%

3.24%

0.07%

0.09%

15.76%

0.32%

0.42%

8.11%

0.17%

0.22%

18.92%

0.39%

0.51%

9.73%

0.20%

0.26%

15.76%

0.32%

0.42%

8.11%

0.17%

0.22%

6.31%

0.13%

0.17%

3.24%

0.07%

0.09%

63.05%

1.29%

1.69%

32.44%

0.66%

0.87%

Column Totals 10.00% 25.00% 30.00% 25.00% 10.00% 100.00%

Federal Highway Administration

Jim Hunt Wayne Berman Ralph Volpe

(717) 221-4422 (202) 366-4069 (404) 562-3637

Jim.hunt@dot.gov Wayne.berman@dot.gov Ralph.volpe@dot.gov

FHWA-HOP-13-005